Correlation Between Equillium and Sangamo Therapeutics

Can any of the company-specific risk be diversified away by investing in both Equillium and Sangamo Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Equillium and Sangamo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equillium and Sangamo Therapeutics, you can compare the effects of market volatilities on Equillium and Sangamo Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Equillium with a short position of Sangamo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and Sangamo Therapeutics.

Diversification Opportunities for Equillium and Sangamo Therapeutics

-0.46

Correlation Coefficient

Equillium  Sangamo Therapeutics

Very good diversification

The 3 months correlation between Equillium and Sangamo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Sangamo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangamo Therapeutics and Equillium is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Equillium are associated (or correlated) with Sangamo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangamo Therapeutics has no effect on the direction of Equillium i.e., Equillium and Sangamo Therapeutics go up and down completely randomly.

Pair Corralation between Equillium and Sangamo Therapeutics

Allowing for the 90-day total investment horizon Equillium is expected to generate 0.78 times more return on investment than Sangamo Therapeutics. However, Equillium is 1.28 times less risky than Sangamo Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Sangamo Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  110.00  in Equillium on October 4, 2024 and sell it today you would lose (35.00) from holding Equillium or give up 31.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Equillium  vs.  Sangamo Therapeutics

Equillium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sangamo Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sangamo Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Sangamo Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Sangamo Therapeutics

The main advantage of trading using opposite Equillium and Sangamo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium position performs unexpectedly, Sangamo Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sangamo Therapeutics will offset losses from the drop in Sangamo Therapeutics' long position.

The idea behind Equillium and Sangamo Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.